The father-and-daughter owners of the Dallas-based Gas Pipe smoke shop retail chain were acquitted Monday by a federal jury of the most serious drug-trafficking charges against them for selling a synthetic marijuana product known as “spice” that authorities called a deadly poison.

Gerald “Jerry” Shults, 72, and Amy Herrig, 43, were each found guilty of one felony count — conspiracy to defraud the U.S. — for misbranding their spice products.

Each faces up to five years in federal prison. A sentencing hearing will be scheduled.

The smokeable leafy products, sprayed with chemicals imported mostly from China, were labeled “Not for human consumption.” Spice was marketed as potpourri, incense and bath salts. The labeling on some packets also falsely claimed the product did not contain synthetic cannabinoids.

Shults and Herrig had been facing up to life in prison. The jury cleared them of 10 other counts each in the indictment, including conspiracy to distribute a controlled substance analogue, conspiracy to commit money laundering, running a continual criminal enterprise, and conspiracy to commit mail and wire fraud.

The jury found co-defendant Bridgett Payrot, an Arlington store manager, guilty of a misdemeanor fraud charge related to misbranding. Office manager Carolyn Settlemire was acquitted of all charges against her.

After hearing evidence for about three weeks, the jury deliberated for just a day and a half before reaching a verdict.

“They have just awoken from this 4 1/2-year nightmare,” said George Milner, a member of the defense team who represented Shults. “My client and his daughter can now to a very large extent put this matter behind them and move on with their lives.”

Milner said he doesn’t expect Shults to get the maximum sentence.

Ambiguous

The Gas Pipe case was considered the nation’s largest synthetic marijuana prosecution. The company had stores across Texas and in New Mexico, and its owners earned about $40 million in profits from selling spice, according to prosecutors. Many Gas Pipe stores continue to operate.

U.S. Attorney Erin Nealy Cox said that she respects the jury’s opinion and that Shults and Herrig left the courtroom Monday as convicted felons.

“The jury found that for years, the defendants peddled dangerous synthetic cannabinoids — also known as "spice" — as innocuous 'herbal incense' products, causing harm to our citizens,” she said.

Clyde E. Shelley, Jr., special agent in charge of the Drug Enforcement Administration’s Dallas office, issued the following statement:

“We understand and respect the jury’s opinion in the case and await the sentencing of all defendants found guilty today. Nevertheless, the DEA will continue to investigate and dismantle all persons and organizations involved with drug trafficking in the North Texas region.”

Many spice products were not illegal prior to 2012. And the defense saw that as a big problem for federal prosecutors. Milner and other defense lawyers repeatedly told jurors that the law was vague to begin with and kept changing. They said their clients tried to comply with the government’s growing banned-substance list by selling off and dumping products before they became illegal.

The Gas Pipe trial focused largely on the federal law banning drug analogues, which are substances that are “substantially similar” to illegal drugs and produce the same type of high.

The Gas Pipe store at East R.L. Thornton Fwy & Grand Ave. photographed on Friday, September 21, 2018 in Dallas. The owners of the Gas Pipe chain go to trial on federal drug trafficking charges that could land them in prison for the rest of their lives. The government claims the father and daughter earned millions by selling dangerous synthetic marijuana products like K2 and Spice, which are responsible for an epidemic of recent overdoses across the U.S. (Shaban Athuman/The Dallas Morning News)

(Shaban Athuman/Staff Photographer)

Milner said the outcome of the trial shows that Congress needs to rewrite the drug analogue law.

“It’s incredibly ambiguous. When lawyers and chemists can’t figure out what is and what is not prohibited, there is something wrong with that statute,” he said.

Milner said retail smoke shops have largely stopped selling synthetic marijuana products because of the government’s nationwide crackdown that began in 2012.

John Teakell, a Dallas defense lawyer and former federal prosecutor, said the verdict suggests jurors felt they didn’t have enough information to decide whether a law was violated.

“I think they’re definitely going to be careful in bringing indictments in the future,” he said of federal authorities.

For example, a future synthetic marijuana case might result in misbranding charges rather than drug trafficking, he said.

Dallas trial lawyer Tom Mills, who has handled numerous complex federal cases, disagreed. He said that the Gas Pipe and its owners benefited from "great lawyering" and that he believes prosecutors will continue to bring cases hoping the accused will not be able to afford that.

A man lays handcuffed and unresponsive as first responders attend to him at a DART (Dallas Area Rapid Transit) rail stop during rush hour in downtown Dallas, Monday, Sept. 22, 2014. According to police on the scene the man had smoked K2, also known as "spice," a synthetic marijuana known to cause hallucinations and violent behavior. (AP Photo/LM Otero)

(LM Otero/AP)

“Plus, when the government keeps changing the rules, it’s impossible to know how to follow the rules,” Mills said.

The Gas Pipe’s legal team noted during the trial that dissent even exists within the DEA about what is and what is not an analogue.

The defense lawyers put on their own expert chemists, whose testimony conflicted with the government’s experts.

Their clients, they told the jury, paid for lab reports to find out which chemicals were present in their spice products, in an attempt to comply with the law.

James Felman, an attorney for Gas Pipe, told the jury that the government does not publish or post on its websites the list of banned drug analogues. He called into question the need for such secrecy when businesses are expected to follow the law. If the defendants didn’t know what they were selling was an illegal analogue, then they didn’t violate the law, Felman said.

Asset battle

The Gas Pipe’s four-year battle with the government is not over.

Shults, Herrig and their companies still face a civil forfeiture action against them, in which the government’s burden of proof is not as strong.

At stake is millions of dollars and large assets like the historic Ridglea Theater in Fort Worth, which Shults bought and restored. The government also wants to take his successful Alaskan fishing lodge.

Milner said he suspects that the “adverse verdicts” will alter the government’s strategy in the forfeiture case, resulting in a more favorable outcome for his client.

He said Shults wants to spend time with his other interests and was transitioning into retirement when the government indicted him.

“I suspect they will go back and regroup and see where they are,” Milner said of prosecutors.

Jerry Shults, an avid outdoorsman, still has to fight to keep his Alaskan fishing lodge.

(Facebook)

Prosecutors said during the trial that the defendants knew their products were harmful. Spice subjected users to seizures, hallucinations, violent and psychotic episodes, and “zombielike” behavior, they told the jury.

Congress passed a law banning drug analogues because of clever dealers who try to stay a step ahead of the DEA, said Assistant U.S. Attorney Gary Tromblay.

The Gas Pipe kept buying newer versions of spice that rogue chemists in China produced by tinkering with the molecular structure, he said. But in the end, he said, it was the same poison with the same devastating effect.